ESTIMATING THE VALUE OF CONTRACTS - A SIMULATION STUDY.

Charles S. Tapiero, Philippe de Loze

Research output: Contribution to journalArticle

Abstract

Contracts are binding bilateral agreements by which agreed-on exchange terms between two firms are used as substitutes for current market mechanisms as a medium of economic exchange. A model describing the probabilistic evolution of prices and demands, contract clauses and the value of contracts is simulated. As an example, five contract terms are considered and the simulated probability distributions for the value of each of these contracts is given. They are then compared in terms of their expected returns, variance and stochastic dominance.

Original languageEnglish (US)
Pages (from-to)33-49
Number of pages17
JournalRev Fr Autom Inf Rech Oper
Volume8
DOIs
StatePublished - Jan 1 1974

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ASJC Scopus subject areas

  • Engineering(all)

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